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At Insider Monkey, we pore over the filings of nearly 866 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of March 31st. In this article, we will use that wealth of knowledge to determine whether or not WEX Inc (NYSE:WEX) makes for a good investment right now.
WEX Inc (NYSE:WEX) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 26 hedge funds' portfolios at the end of March. Our calculations also showed that WEX isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as NRG Energy Inc (NYSE:NRG), Under Armour Inc (NYSE:UA), and The Middleby Corporation (NASDAQ:MIDD) to gather more data points.
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Paul Reeder of PAR Capital Management
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Do Hedge Funds Think WEX Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2020. On the other hand, there were a total of 35 hedge funds with a bullish position in WEX a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in WEX Inc (NYSE:WEX) was held by PAR Capital Management, which reported holding $209.2 million worth of stock at the end of December. It was followed by Impactive Capital with a $70.9 million position. Other investors bullish on the company included Tremblant Capital, Junto Capital Management, and Select Equity Group. In terms of the portfolio weights assigned to each position Impactive Capital allocated the biggest weight to WEX Inc (NYSE:WEX), around 8.77% of its 13F portfolio. PAR Capital Management is also relatively very bullish on the stock, earmarking 4.85 percent of its 13F equity portfolio to WEX.
Because WEX Inc (NYSE:WEX) has faced a decline in interest from the aggregate hedge fund industry, it's safe to say that there is a sect of money managers that decided to sell off their entire stakes in the first quarter. Interestingly, Neal Nathani and Darren Dinneen's Totem Point Management sold off the largest position of all the hedgies watched by Insider Monkey, comprising an estimated $13.1 million in stock. Zach Petrone's fund, Highside Global Management, also dropped its stock, about $9.8 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks similar to WEX Inc (NYSE:WEX). These stocks are NRG Energy Inc (NYSE:NRG), Under Armour Inc (NYSE:UA), The Middleby Corporation (NASDAQ:MIDD), Amdocs Limited (NASDAQ:DOX), CRISPR Therapeutics AG (NASDAQ:CRSP), Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI), and BridgeBio Pharma, Inc. (NASDAQ:BBIO). This group of stocks' market valuations resemble WEX's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NRG,35,1606143,4 UA,51,1910459,4 MIDD,28,520500,-2 DOX,32,716631,12 CRSP,27,1407504,-7 MRVI,26,401044,-8 BBIO,26,2899063,3 Average,32.1,1351621,0.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.1 hedge funds with bullish positions and the average amount invested in these stocks was $1352 million. That figure was $538 million in WEX's case. Under Armour Inc (NYSE:UA) is the most popular stock in this table. On the other hand Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks WEX Inc (NYSE:WEX) is even less popular than MRVI. Our overall hedge fund sentiment score for WEX is 27.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Hedge funds dodged a bullet by taking a bearish stance towards WEX. Our calculations showed that the top 10 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th but managed to beat the market again by 6.7 percentage points. Unfortunately WEX wasn't nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); WEX investors were disappointed as the stock returned -6.3% since the end of the first quarter (through 7/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.